Question

ACC522 Tan 6 of 10 What effect do changes in activity have on fixed costs per unit? А An inverse effect B) No effect. Fxed co

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Answer #1

Answer: An inverse effect

Explanation:

In a fixed cost total fixed cost is never changed in any activity level. But fixed cost per unit is changed inversely.

Fixed cost per unit is changed on base of produced units.

If produced units are increased then the fixed cost per unit is decreased.

If produced units are decreased the fixed cost per unit is increased.

So the fixed cost per unit is inverse to the produced units.

For example:

Fixed cost Produced units Fixed cost per unit
10000 1100 9.09
10000 1000 10.00
10000 900 11.11

Thus, the option A) is correct and remaining given options are incorrect.

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